Fund Firms Sprucing Up Services for Bank Brokers

As they ring in the new year, mutual fund companies that sell their wares through banks are readying an expanded array of sales support and training programs.

Some are developing marketing materials built around new themes such as tax reform and retirement planning. Others are beefing up training programs for both bank brokers and their managers.

A much-welcome rebound in the stock and bond markets over the past year helped fund firms boost sales through banks by as much as 40% from last year, according to a sampling of fund executives contacted.

But if these fund firms want banks to continue selling their funds, they recognize that more is needed than rising net asset values. It's incumbent upon them to help banks market their programs and improve the selling skills of brokers.

That's what banks are demanding the most.

The fund companies that help banks the most stand to keep their offerings on a bank brokerage's shelf. Getting rejected by banks can be disastrous, because banks have limited their fund offerings.

"The bottom-line issue for banks is to help make their people more productive. That's what were trying to help them do, " said Richard A. Davies, managing director of the banks division at Alliance Capital Management Corp.

As a result, fund firms are upgrading their programs, and trying to distinguish themselves from each other.

*Van Kampen Merritt, for example, plans to roll out a sophisticated marketing program to help brokers capitalize on investors' uncertainty about tax reform. The Oakbrook Terrace, Ill.-based firm, is developing marketing brochures, seminar packets, and slide shows that outline the sundry tax reform proposals in Congress, said R. Scott West, director of financial institutions.

*Kemper Financial Corp. plans to introduce marketing materials for promotions to retirees and the pre-retirement market. The firm also plans to help banks target customers seeking ways to invest severance packages after getting laid off. "What we're going to do is show banks we understand the nature of their customers," said Terrence Cunningham, Kemper's national account manager.

*Alliance Capital plans to condition brokers to "work their books," updating customer portfolios and getting referrals. Brokers will learn to keep records of customers' past fund purchases and use that information to sell them more funds.

The fund firm also plans to teach brokers how to use asset-allocation programs to diversify client portfolios, and rebalance them when market conditions change.

*Fidelity Investments is one of several companies rolling out training programs for managers of bank brokers. Fidelity will teach these managers how to recruit brokers. The firm also plans to train brokers how to build retirement plans for customers. Andrew Olear, a national sales manager with Fidelity, said he plans to promote his firm's sophisticated demographic research to banks.

Mutual fund marketing support at banks has "been getting better," since banks began whittling their preferred lists of fund families, said James Overholt, president of the brokerage unit at Bank South Corp., Atlanta. "In the not-too-distant past, the marketing materials were more promotional than educational."

Fund firms swear to the long-term revenue potential at banks, even though sales growth in 1995 lagged behind that of competitors. "We've been impressed with the retention of assets among banks," said Mr. West of Van Kampen.

Keeping assets in a portfolio is more important than sales, because fund companies draw the bulk of their revenues from management fees. Mr. West said most bank brokers sell funds to fit long-term needs, which means assets are more likely to stay put in portfolios.

Another trend to watch out for in 1996 is mutual fund companies putting more emphasis on services for their 30 or 50 biggest bank clients.

Some said they will customize marketing materials for their largest clients, and offer generic ones to small regional and community banks.

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